MikLin
Enterprises, Inc. ("MikLin") petitions for review
of a National Labor Relations Board ("Board") Order
holding that MikLin violated Sections 8(a)(1) and 8(a)(3) of
the National Labor Relations Act ("NLRA" or
"the Act"), 29 U.S.C. §§ 158(a)(1) and
(3), when it (i) discharged and disciplined employees who
publicly distributed posters suggesting that MikLin's
"Jimmy John's" sandwiches posed a health risk
to consumers; (ii) solicited employees to aid in removing the
posters; (iii) encouraged employees to disparage a union
supporter; and (iv) removed union literature from in-store
bulletin boards. MikLin argues that the Board misapplied
governing law and its decision is not supported by
substantial evidence. The Board cross-petitions for
enforcement of its Order. A divided panel enforced the Order
in its entirety. We granted rehearing en banc and vacated the
panel decision. We now conclude that the means the
disciplined employees used in their poster attack were so
disloyal as to exceed their right to engage in concerted
activities protected by the NLRA, as construed in a
controlling Supreme Court precedent, NLRB v. Local Union
No. 1229, IBEW, 346 U.S. 464 (1953) ("Jefferson
Standard"). We therefore decline to enforce the
determination that MikLin violated the Act by disciplining
and discharging those employees and by soliciting removal of
the unprotected posters. We enforce the remainder of the
Order, as so modified.

I.
Background.

A.
The "Sick Day Posters" Campaign.

MikLin
is a family enterprise that owns and operates ten Jimmy
John's sandwich-shop franchises in the Minneapolis-St.
Paul area. Michael Mulligan is president and co-owner; Robert
Mulligan, his son, is vice-president. In 2007, several MikLin
workers began an organizing campaign seeking representation
by the Industrial Workers of the World ("IWW")
union. The IWW lost a Board-conducted election in October
2010, filed unfair labor practice charges and objections to
the election with the Board, and continued its organizing
campaign by urging MikLin to provide employees holiday pay in
late 2010. On January 10, 2011, MikLin and the IWW settled
the IWW's objections. MikLin admitted no wrongdoing but
agreed to a Board-conducted rerun election if the IWW filed
for the election after sixty days but not later than after
eighteen months.

With
the holiday season passed, the IWW decided its next
"march on the boss" group action would be to demand
paid sick leave. The IWW concluded that the approach of flu
season was a good time to raise the issue. At this time,
MikLin's handbook required any employee who would be
absent from a shift to find a replacement and notify the
store manager. Rule 11 of Jimmy John's Rules for
Employment, which employees received when hired, stated:
"Find your own replacement if you are not going to be at
work. We do not allow people to simply call in sick! We
require our employees and [managers] to find their own
replacement! NO EXCEPTIONS!" Failure to follow this
procedure resulted in termination. MikLin did not offer paid
leave for sick employees, though an employee with sufficient
tenure was entitled to paid leave to care for a sick child.

Organizers
of the IWW sick leave campaign began their attack in late
January and early February 2011 by designing and posting on
community bulletin boards in MikLin stores posters that
prominently featured two identical images of a Jimmy
John's sandwich. Above the first image were the words,
"YOUR SANDWICH MADE BY A HEALTHY JIMMY JOHN'S
WORKER." The text above the second image said,
"YOUR SANDWICH MADE BY A SICK JIMMY JOHN'S
WORKER." "HEALTHY" and "SICK" were
in red letters, larger than the surrounding text in white.
Below the pictures, white text asked: "CAN'T TELL
THE DIFFERENCE?" The response, in red and slightly
smaller: "THAT'S TOO BAD BECAUSE JIMMY JOHN'S
WORKERS DON'T GET PAID SICK DAYS. SHOOT, WE CAN'T
EVEN CALL IN SICK." Below, in slightly smaller white
text, was the warning, "WE HOPE YOUR IMMUNE SYSTEM IS
READY BECAUSE YOU'RE ABOUT TO TAKE THE SANDWICH
TEST." Text at the bottom of the poster asked readers to
help the workers win paid sick days by going to their
website.

MikLin
managers quickly removed the posters from store bulletin
boards. On the morning of March 10 -- the day before the IWW
could request a rerun election --IWW supporters distributed a
press release, letter, and the sandwich poster to more than
one hundred media contacts, including local newspapers and
major news outlets such as the Associated Press, Reuters,
Bloomberg, and NBC News. The press release highlighted
"unhealthy company behavior." Its second sentence
framed the message: "As flu season continues, the
sandwich makers at this 10-store franchise are sick and tired
of putting their health and the health of their customers at
risk." The release declared: "According to findings
of a union survey, Jimmy John's workers have reported
having to work with strep throat, colds and even the
flu." The release ended with a threat: if Robert and
Michael Mulligan would not talk with IWW supporters about
their demands for paid sick leave, the supporters would
proceed with "dramatic action" by "plastering
the city with thousands of Sick Day posters."

Employees
attached to the press release a "sick leave letter"
to the Mulligans which asserted that health code violations
occur at MikLin stores nearly every day. The employees
complained: "By working sick, we are jeopardizing the
entirety of [the company's] image and risking public
safety." The letter accused MikLin of refusing to put
customers first, risking customers' health, and
"shoving [customers] to the bottom of the well of
importance." Like the press release, the letter
concluded with a threat: if the Mulligans would not meet the
employees' demands, the campaign would "move forward
with [its] Sick Day posters by posting them not only in
stores, but on the University's Campus, in hospitals, on
street corners, and any other place where postings are
common, citywide."

Also on
March 10, four organizers met with Robert Mulligan. They told
Mulligan that MikLin's attendance policy and low wages
pressured employees to work while sick. Mulligan said MikLin
was in the process of reforming its policies. The organizers
provided Mulligan a printed version of their letter and press
release and warned that, unless MikLin took action to fix the
sick day policy within ten days, employees would display
sandwich posters throughout the area. Employees who attended
felt they had achieved some "common ground."

MikLin
posted a new sick leave policy in each store on March 16. The
new policy provided a sliding scale of disciplinary points
for absences. An employee who did not report but found a
replacement would receive no points. An absent employee who
could not find a replacement but notified the store manager
at least one hour before shift start would receive one point.
An absent employee without a replacement who called less than
one hour prior to shift start would receive two points. An
absent employee who did not call the manager and did not find
a replacement would receive three points. An employee who
received four disciplinary points within a twelve- month
period would be terminated. The policy emphasized: "With
regard to absenteeism due to flu like symptoms, Team Members
are not allowed to work unless and until those symptoms have
subsided for 24 hours." Between March 10 and March 20,
MikLin posted a notice in its stores reminding workers:
"[f]or those who 'don't feel good' we have a
policy that expects them to find a replacement for their
shift . . . . [T]he record clearly shows that we have
demonstrated flexibility with regard to excusing those who
cannot find replacements."

On
March 20, IWW supporters implemented their threat to plaster
the city with a new version of the Sick Day posters they had
placed in MikLin stores in January and February. The bottom
of the publicly distributed posters incorporated one change:
rather than asking for support of the employees' request
for paid sick leave, the public posters listed Robert
Mulligan's personal telephone number and instructed
customers to call him to "LET HIM KNOW YOU WANT HEALTHY
WORKERS MAKING YOUR SANDWICH!" A copy of the publicly
distributed posters appears as Appendix A to this opinion.
Organizers placed posters in various locations near MikLin
stores, including lampposts, trash cans, and mailboxes.
Robert Mulligan testified that he was "bombarded by
phone calls" for close to a month from people who
thought it was unsafe to eat at Jimmy John's. Concerned
about the effect on MikLin's business, Mulligan and some
managers took down the public posters. On March 22, MikLin
fired six employees who coordinated the attack and issued
written warnings to three who assisted.

The IWW
continued its sick leave attack. In a press release issued a
day after the terminations, a discharged employee stated:
"It just isn't safe -- customers are getting their
sandwiches made by people with the flu, and they have no idea
. . . . [R]ather than safeguard public health and do the
right thing for their employees and their customers, Jimmy
John's owners Mike and Rob Mulligan are trying to silence
us." On March 30, the IWW issued another press release
stating that "[c]ustomers have a right to know that
their sandwich could be filled with germs, " that IWW
members have a duty to speak out on this "public health
issue, " and that employees "blew the whistle by
posting 3000 copies of a poster advising the public of health
risks at the sandwich chain." The release quoted one
employee as stating: "The unfettered greed of franchise
owner Mike Mulligan and Jimmy John Liautaud himself
jeopardizes the health of thousands of customers and workers
almost every day. We will speak out until they realize that
no one wants to eat a sandwich filled with cold and flu
germs."

B.
The NLRB Proceedings.

Following
a two-day evidentiary hearing, the Board's Administrative
Law Judge ("ALJ") concluded that MikLin violated
Sections 8(a)(1) and 8(a)(3) of the Act. Citing prior Board
decisions, the ALJ ruled that "Section 7 [29 U.S.C.
§ 157] protects employee communications to the public
that are part of and related to an ongoing labor dispute,
" such as the Sick Day posters and related press
releases, unless they are "so disloyal, reckless, or
maliciously untrue as to lose the Act's
protections." To lose Section 7 protection, "an
employee's public criticism . . . must evidence 'a
malicious motive'" or be made with knowledge of the
statements' falsity or with reckless disregard for their
truth or falsity.

The ALJ
found that the Sick Day posters were not maliciously untrue.
While "it is not literally true that employees could not
call in sick, " the ALJ observed, employees "are
subject to discipline if they call in sick without finding a
replacement." Thus, the assertion, "SHOOT, WE
CAN'T EVEN CALL IN SICK, " was "protected
hyperbole." The ALJ acknowledged record evidence that
MikLin had served more than six million sandwiches over its
ten-year existence and had been investigated by the Minnesota
Department of Health only two times for food borne disease --
once in 2006 and once in 2007, when the investigating
sanitarian "noted overall compliance with food code
requirements and no critical violations." The ALJ found,
however, "it is at least arguable that [MikLin's]
sick leave policy subjects the public to an increased risk of
food borne disease, " and MikLin "could have waged
its own publicity campaign" to attract consumers. The
ALJ made no mention of the false assertion in the open letter
accompanying the IWW press release that health code
violations occurred at MikLin stores nearly every day. Nor
did the ALJ even attempt to analyze and apply the disloyalty
principle of Jefferson Standard.

A
divided panel of the Board affirmed the ALJ's findings
and conclusions. MikLin Enters., Inc., 361 N.L.R.B.
No. 27, at *7 (2014). The majority concluded "that
neither the posters nor the press release were shown to be so
disloyal, reckless, or maliciously untrue as to lose the
Act's protection." The public communications
"were clearly related to the ongoing labor dispute
concerning the employees' desire for paid sick leave. . .
. Indeed, any person viewing the posters and press release
would reasonably understand that the motive for the
communications was to garner support for the campaign to
improve the employees' terms and conditions of employment
by obtaining paid sick leave rather than to disparage
[MikLin] or its product." Nor were any of the statements
maliciously untrue.

Turning
to the question of disloyalty, the majority noted that
"Board law has developed considerably in its approach to
the question of employee disloyalty." "To lose the
Act's protection as an act of disloyalty, an
employee's public criticism of an employer must evidence
a malicious motive, " even if the public communication
"raise[s] highly sensitive issues such as public
safety." Accepting the majority's summary of prior
Board decisions, the dissenting Member would nonetheless have
held the Sick Day posters and press release unprotected,
because "it is well established that employees lose the
Act's protection if their means of protest are
'flagrantly disloyal, wholly incommensurate with any
grievances which they may have, and manifested by public
disparagement of the employer's product or undermining of
its reputation, '" quoting Five Star
Transportation, Inc., 349 N.L.R.B. 42, 44-47 (2007),
enforced, 522 F.3d 46 (1st Cir. 2008).

II. "Sick Day" Poster Issues.

It is
well established that an employer commits an unfair labor
practice if it discharges employees for engaging in concerted
activities that are protected by Section 7 of the NLRA,
including communications to third parties or to the public
that seek to "improve their lot as employees through
channels outside the immediate employee-employer
relationship." Eastex, Inc. v. NLRB, 437 U.S.
556, 565 (1978). Section 10(c) of the Act, however, expressly
limits the Board's broad authority to remedy unlawful
employee discharges: "No order of the Board shall
require the reinstatement of any individual as an employee .
. . if such individual was suspended or discharged for
cause." 29 U.S.C. § 160(c). The interplay between
Section 7 and Section 10(c) was the critical question the
Supreme Court addressed in Jefferson Standard.

A.
In Jefferson Standard, the Court upheld the
Board's decision that a broadcasting station did not
violate the Act when it fired technicians who distributed
handbills "making a sharp, public, disparaging attack
upon the quality of the company's product and its
business policies, in a manner reasonably calculated to harm
the company's reputation and reduce its income." 346
U.S. at 471. After bargaining negotiations broke down,
employees first picketed the station for treating its
employees unfairly. When this tactic failed, the employees
distributed thousands of handbills, signed "WBT
Technicians, " criticizing the station's poor
programming quality and asserting that Jefferson Standard did
not value its customers and considered the local city to be a
"second-class community." Id. at 468. The
Board found the employee handbills unprotected because the
technicians "deliberately undertook to alienate their
employer's customers by impugning the technical quality
of his product." Jefferson Standard Broadcasting
Co., 94 N.L.R.B. 1507, 1511 (1951). Though the
technicians' purpose was "to extract a concession
from the employer with respect to the terms of their
employment, " the Board found that they lost the
Act's protection when they failed to disclose their
interests as employees. Id. at 1511. The Board
reasoned that the technicians lost the Act's protection
because "the gist of [the technicians'] appeal to
the public was that the employer ought to be boycotted
because he offered a shoddy product to the consuming public
-- not because he was 'unfair' to the employees who
worked on that product." Id. at 1512. The Board
declined to decide whether the product disparagement in the
handbills would justify discharge "had it been uttered
in the context of a conventional appeal for support of the
union in the labor dispute." Id. at 1512 n.18.

The
Supreme Court, in affirming the Board, decided the case on
broader grounds. After quoting the "for cause"
language of Section 10(c), the Court declared that
"[t]here is no more elemental cause for discharge of an
employee than disloyalty to his employer." Jefferson
Standard, 346 U.S. at 472. Congress in the NLRA
"did not weaken the underlying contractual bonds and
loyalties of employer and employee." Id. at
473. Absent a labor controversy, the technicians' conduct
"unquestionably would have provided adequate cause for
their disciplinary discharge within the meaning of §
10(c). . . . The fortuity of the coexistence of a labor
dispute affords these technicians no substantial
defense." Id. at 476. Thus, the handbill attack
targeting "the quality of the company's product . .
. was as adequate a cause for the discharge of its sponsors
as if the labor controversy had not been pending."
Id. at 477. Though the Court noted several times
that the technicians failed to disclose a connection between
their labor dispute and the handbill attack, the Court
declined to remand for further consideration of whether the
handbills were an "appeal for support in the pending
dispute, " rather than "a concerted separable
attack, " because the attack would be unprotected either
way:

Even if the attack were to be treated, as the Board has not
treated it, as a concerted activity wholly or partly within
the scope of those mentioned in § 7, the means used by
the technicians in conducting the attack have deprived the
attackers of the protection of that section, when read in the
light and context of the purpose of the Act.

Id. at 477-78.

The
Supreme Court's decision not to remand in Jefferson
Standard made clear that the Court's disloyalty
ruling includes communications that otherwise would fall
within Section 7 protection, if those communications
"mak[e] a sharp, public, disparaging attack upon the
quality of the company's product and its business
policies, in a manner reasonably calculated to harm the
company's reputation and reduce its income." 346
U.S. at 471. In NLRB v. Washington Aluminum Co., 370
U.S. 9, 17 (1962), the Court confirmed that Section 10(c)
"cannot mean that an employer is at liberty to punish a
man by discharging him for engaging in concerted activities
which § 7 of the Act protects." But the Court
explained that Jefferson Standard "denied the
protection of § 7 to activities characterized as
'indefensible' because they were there found to show
a disloyalty to the workers' employer which [the] Court
deemed unnecessary to carry on the workers' legitimate
concerted activities." Id., quoting
Jefferson Standard, 346 U.S. at 477. Thus, we reject
the dissent's suggestion that Jefferson Standard
does not apply in this case because the employees'
disparaging communications "expressly reference[d]
ongoing labor disputes." Post at
31.[1]

Though
the Supreme Court's interpretation of the NLRA in
Jefferson Standard remains unchanged, "Board
law has developed considerably in its approach to the
question of employee disloyalty." MikLin, 361
N.L.R.B. No. 27, at *5 n.18. In 1987, the Board articulated
its modern interpretation: "Jefferson Standard
held that employees may engage in communications with third
parties in circumstances where the communication is related
to an ongoing labor dispute and when the communication is not
so disloyal, reckless, or maliciously untrue to lose the
Act's protection." Emarco, Inc., 284
N.L.R.B. 832, 833 (1987); see Am. Golf Corp., 330
N.L.R.B. 1238, 1240 (2000). Although Jefferson
Standard did not involve employee public communications
that were reckless or maliciously untrue, we do not question
the Board's view that such communications are not
entitled to the protection of Section 7 as limited by Section
10(c).[2] Indeed, we applied that standard in
St. Luke's Episcopal-Presbyterian Hosp. v. NLRB,
268 F.3d 575, 580 (8th Cir. 2001), citing Montefiore
Hosp., 621 F.2d at 517.

The
issue in this case is the Jefferson Standard
disloyalty principle -- Section 10(c) permits an employer to
fire an employee for "making a sharp, public,
disparaging attack upon the quality of the company's
product and its business policies, in a manner reasonably
calculated to harm the company's reputation and reduce
its income." 346 U.S. at 471. On this issue, while
always purporting to apply Jefferson Standard's
holding, the Board has migrated to a severely constrained
interpretation of that decision. "To lose the Act's
protection as an act of disloyalty, an employee's public
criticism of an employer must evidence a malicious
motive." MikLin, 361 N.L.R.B. No. 27, at *5
(quotation omitted). "[E]ven communications that raise
highly sensitive issues such as public safety [are] protected
where they are sufficiently linked to a legitimate labor
dispute and are not maliciously motivated to harm the
employer." Id. at *4-*5.

In our
view, the Board fundamentally misconstrued Jefferson
Standard in two ways. First, while an employee's
subjective intent is of course relevant to the disloyalty
inquiry -- "sharp, public, disparaging attack"
suggests an intent to harm --the Jefferson Standard
principle includes an objective component that focuses, not
on the employee's purpose, but on the
means used -- whether the disparaging attack was
"reasonably calculated to harm the company's
reputation and reduce its income, " 346 U.S. at 471, to
such an extent that it was harmful, indefensible
disparagement of the employer or its product, id. at
477. By holding that no act of employee
disparagement is unprotected disloyalty unless it is
"maliciously motivated to harm the employer, " the
Board has not interpreted Jefferson Standard -- it
has overruled it.[3]

Second,
the Board's definition of "malicious motive"
for these purposes excludes from Jefferson
Standard's interpretation of Section 10(c) all
employee disparagement that is part of or directly related to
an ongoing labor dispute. While the employees "may have
anticipated that some members of the public might choose not
to patronize [MikLin's] restaurants after reading the
posters or press release, " the Board ruled, their
public communications were protected activity because
"there is no evidence that [their] purpose was to
inflict harm on [MikLin]." Rather, "they were
motivated by a sincere desire to improve their terms and
conditions of employment." MikLin, 361 N.L.R.B.
No. 27, at *6. In other words, the Board refuses to treat as
"disloyal" any public communication intended to
advance employees' aims in a labor dispute, regardless of
the manner in which, and the extent to which, it harms the
employer. As the Court held in Jefferson Standard
that its disloyalty principle would apply even if the
employees had explicitly related their public disparagement
to their ongoing labor dispute, once again the Board has not
interpreted Jefferson Standard --it has overruled
it.

By
requiring an employer to show that employees had a subjective
intent to harm, and burdening that requirement with an overly
restrictive need to show "malicious motive, " the
Board has effectively removed from the Jefferson
Standard inquiry the central Section 10(c) issue as
defined by the Supreme Court -- whether the means used
reflect indefensible employee disloyalty. This is an error of
law. See George A. Hormel & Co. v. NLRB, 962
F.2d 1061, 1065 (D.C. Cir. 1992). Our prior cases confirm
that an employee's disloyal statements can lose Section 7
protection without a showing of actual malice. In St.
Luke's, we expressly rejected the contention that
public disparagement of an employer "was protected
activity unless maliciously false." 268 F.3d at 579. We
explained that cases interpreting Jefferson Standard
"establish that an employee exceeds the boundaries of
protected activity when she falsely and publicly disparages
her employer or its products and services." Id.
at 580. By requiring proof that disloyal conduct was the
product of a malicious motive, the Board fundamentally
misinterpreted both Jefferson Standard and our
decisions construing and applying Jefferson
Standard.

Rather
than employee motive, the critical question in the
Jefferson Standard disloyalty inquiry is whether
employee public communications reasonably targeted the
employer's labor practices, or indefensibly disparaged
the quality of the employer's product or services. The
former furthers the policy of the NLRA; the latter does not.
See Jefferson Standard, 346 U.S. at 476; see
also Five Star, 349 N.L.R.B. at 46. This distinction
focuses on the type of harm employees' methods cause.
When employees convince customers not to patronize an
employer because its labor practices are unfair, subsequent
settlement of the labor dispute brings the customers back, to
the benefit of both employer and employee. By contrast,
sharply disparaging the employer's product or services as
unsafe, unhealthy, or of shoddy quality causes harm that
outlasts the labor dispute, to the detriment of all employees
as well as the employer. See Diamond Walnut Growers, Inc.
v. NLRB, 113 F.3d 1259, 1267 (D.C. Cir. 1997) (en banc),
cert. denied, 523 U.S. 1020 (1998); compare
Montefiore, 621 F.2d at 517 (efforts by striking doctors
to discourage patients from entering the clinic were
unprotected, although related to labor dispute, because they
"appealed to patients to turn away not out of sympathy
with the aims of the striking workers . . ., but in the
belief that they could not obtain competent treatment
there"), and St. Luke's, 268 F.3d at 580
(nurse's public statements relating to ongoing labor
dispute were unprotected because she "disparaged the
quality of patient care being provided by [her employer] in a
way guaranteed to adversely affect the hospital's
reputation with prospective patients and the public at
large"), with NLRB v. Greyhound Lines, Inc.,
660 F.2d 354, 357 (8th Cir. 1981) (bus drivers' factual
statements regarding anticipated service delays were not
unprotected because they "did not contain any insults or
negative insinuations about the Company's services or
integrity with respect to its customers").[4]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.
The Board argues, and our dissenting colleagues agree, that
its decision is entitled to judicial deference under
Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,
Inc., 467 U.S. 837 (1984). It is certainly well
established that "the task of defining the scope of
&sect; 7 is for the Board to perform in the first instance as
it considers the wide variety of cases that come before
it." NLRB v. City Disposal Sys., Inc., 465 U.S.
822, 829 (1984) (quotation omitted). But the dissent argues
for far greater Board autonomy, relying on the statement in
National Cable & Telecommunications Ass&#39;n v.
Brand X Internet Services, 545 U.S. 967, 982 (2005),
that a prior court of appeals "construction of a statute
trumps an agency construction otherwise entitled to
Chevron deference only if the prior court decision
holds that its construction follows from the
unambiguous terms of the statute and thus leaves no
room for agency discretion." This principle, if applied
literally here, would leave the Board free to disregard ...

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